Once upon a time, the government guarded the public against
business monopolies.

Nowadays, the problem is the government. Its policies toward
business are harming competitiveness and helping to push the economy
toward recession. The economy, retirees and working wage families
are taking a hit.

Back in 1984, the biggest business news was the breakup of
AT&T - the old "Ma Bell" - into a long distance
company and seven regional "Baby Bells." AT&T went
from a company with $149 billion in assets to one with $34 billion;
from a company with a million employees to one with a third of
that.1

Nowadays, market pressures force change and competition on
technology companies in ways we never conceived of in 1984. But
rather than stand aside and let the market tame the dominating
power of big firms, government gets in the way.

AT&T is one case in point.

Recently AT&T announced plans to break up into four parts
as part of its conversion from a voice long distance company to
one that offers cable TV, Internet access and local and local
distance telephone.

Ironically, the very government that once forced AT&T to
break up has been standing in the way of its current efforts to
improve competitiveness.

Government caps on cable ownership are preventing AT&T
from developing a comprehensive communications network to compete
with the regional Bell companies - which is perverse, since the
government's purpose in 1984 was to force competition between
the Bells. Needed approvals for mergers with cable companies
dragged on forever. Some local governments thought AT&T should
not be allowed to own cable TV firms unless it agreed to let competitors
use AT&T's cable system for their own purposes - which included
competing with AT&T. But what company buys resources for
its competition's use?

All in all, government's response to AT&T's metamorphosis
- which it should applaud - has been to obstruct and delay.

Odd behavior for a government that claims to support competition.

AT&T is far from the only company to face counterproductive
government behavior.

The Nasdaq technology index plummeted from approximately 5,000
to 3,500 after the Clinton Justice Department, Joel Klein and
David "Dimpled Chad" Boies spearheaded an attack on
Microsoft leading to a court order to break it up. Investors
immediately reconsidered their enthusiasm for technology stocks,
realizing that successful risk-taking might be rewarded by a profit-killing
visit from Uncle Sam.2 According to Lawrence Kudlow, chief investment
strategist and economist at ING Barings LLC, the government assault
on Microsoft alone cost the economy nearly $1.3 trillion in wealth
loss.

4.8 million AT&T stockholders,3 more than a few of whom
are retirees, can sympathize. But make no mistake: The general
public, not just stockholders, is hurt by government's anti-competitive
behavior.

A study by the independent, non-profit Institute for Policy
Innovation analyzed the effect of the Microsoft decision on the
entire economy. Their conclusions are staggering. They conservatively
estimate that, because the decision raises the cost of capital,
it will reduce 2000-2010 tax receipts of all levels of government
by $52.5 billion. Computing the losses in interest savings as
well results in a lowering of government surpluses by $66.8 billion
- federal surpluses by $40.3 billion and state and local by $26.5
billion.

Aunt Minnie, hang on to your hat, because this is bound to
adversely affect the needed bailouts of Social Security and Medicare.

That's not even the worst of it. The study's authors, Gary
and Aldona Robbins, believe the Microsoft decision alone will
reduce gross domestic product by $147.2 billion. Consumer spending
will be reduced by $66 billion. The higher cost of U.S. capital
relative to that of the result of the world will cause U.S. exports
to decline by $14.6 billion. With U.S. production down, investors,
savers and entrepreneurs will earn less, reducing personal income
by $59.6 billion. Savings will fall by $77.6 billion. The slower
economy will result in the creation of 44,900 fewer jobs.

Slower economic growth, say the authors, means a lower standard
of living for everyone. The loss from the Microsoft decision
alone represents a loss of $507 for every single American, or
$1,293 for every household.4

Imagine what the losses to the economy are when the harm caused
by faulty policies to AT&T and hundreds of other companies
is factored in.

Some Americans cheer when government attacks big business.
They don't consider that the end result might be an attack on
their own pocketbook.

In the 17th Century, poet and clergyman John Donne taught that
all mankind is interconnected. His famous words apply also to
the economy: Never send to know for whom the bell tolls; It tolls
for thee.5